IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

An Analysis Of Alternative Net Present Value Capital Investment Decision Models

  • Bradford, Garnett L.
  • Miller, Stephen E.
Registered author(s):

    We have found that the disagreement between Returns-to-Assets (RTA) and Returns-to-Equity (RTE) proponents is not confined to agricultural economics. Depending on the course they are taking and the accompanying text, students are likely to learn that there is a "right" way to calculate Net Present Values (NPVs), either by the RTA method or the RTE method. In most cases, only one of the two methods is discussed and illustrated with numerical examples. Less common are texts that compare the two methods, discuss their underlying assumptions, or show how the NPVs from the two methods can be reconciled. The paper is organized as follows. The first section of the main body of the paper provides a comparative overview of the RTA and RTE methods; the second section discusses our textbook survey; the final section offers our conclusions. Appendix A contains a brief history of the theoretical development of discounted cash flow (DCF) concepts. Appendix B contains additional details on defining components of NPV models. Finally, Appendix C is a listing of some additional references.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://purl.umn.edu/18804
    Download Restriction: no

    Paper provided by Clemson University, Department of Agricultural and Applied Economics in its series Working Papers with number 18804.

    as
    in new window

    Length:
    Date of creation: 1998
    Date of revision:
    Handle: RePEc:ags:cuaewp:18804
    Contact details of provider: Postal: Clemson, SC 29634-0355
    Web page: http://cherokee.agecon.clemson.edu/welcome9.htm

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ags:cuaewp:18804. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.